Agency/partnerships - Texas Bar Exam

Front 1

Do the principal and the agent need capacity to contract?

Back 1

1. The principal must have contractual capacity

2. The agent does not need to have contractual capacity

Front 2

How is actual authority created?

Back 2

Expressly - principal tells agent to act on principal's behalf

Impliedly - principal's conduct leads agent to believe he has authority

Front 3

Example of implied actual authority

Back 3

Agent buys supplies from Office Depot without principal's express permissions.

Principal does not object

Principal is bound if agent keeps buying items (Principal has endorsed agent's actions)

Front 4

What are the substitutes for actual authority?

Back 4

1. Apparent authority
2. Ratification
3. Adoption

Front 5

What is apparent authority?

Back 5

Where the principal leads a 3rd party to reasonably believe that the agent has authority to bind the principal

Front 6

Can the principal's silence create apparent authority?

Back 6

Yes, particularly where the principal is silent while in the presence of the 3rd party

Front 7

How can the principal ratify a contract entered into by the agent without authority?

Back 7

1. Expressly affirming the contract;

2. Accepting the benefit of the contract; or

3. Suing T on the contract

Front 8

What are the requirements to ratify the agent's contract?

Back 8

1. Principal must have knowledge of all material facts

2. Principal must accept the entire contract

3. Principal must have contractual capacity at the time of ratification and at the time the contract was formed

Front 9

How does adoption differ from ratification?

Back 9

With adoption, the principal is liable only from the moment of adoption

With ratification, the principal is liable from the time the contract was originally formed

Front 10

What duties does the agent owe to the principal?

Back 10

1. Duty of care (amount of care depends on any special skills agent may free)

2. Duty of loyalty (must disclose all material facts & get permission)

3. Duty of obedience (must follow principal's reasonable instructions)

Front 11

What duties does the principal owe to the agent?

Back 11

Principal must compensate (unless gratuitous), reimburse and indemnify the agent

Front 12

Discuss the liability the third party may have

Back 12

3rd party is always liable to "disclosed" principals (knows the principals identity)

3rd party is always liable to "partially disclosed" principals (knows the principal exists but doesn't know who he is)

Front 13

When is the third party liable to an undisclosed principal?

Back 13

1. When holding the third party liable would unduly burden him (e.g. requirements contract)

2. Principal fraudulently concealed his identity; or

3. The 3rd party bargained for the agent's personal performance

Front 14

When his the third party liable to the agent?

Back 14

Only when the agent's power is coupled with an interest

Front 15

When is the agent liable to the third party?

Back 15

Only where:
1. the principal is undisclosed or partially undisclosed; or
2. agent breached his warranty of authority

Front 16

When is the master vicariously liable for the torts of the servant?

Back 16

When the tort was committed within the scope of employment

(master and servant are jointly & severally liable)

Front 17

Factors indicating that the person is a servant (rather than an independent contractor)

Back 17

1. Employers has the right to control performance (even if not exercised)
2. Employers supplies the tools and workplace;
3. Employment is long-term;
4. Little skill is required;
5. The work is part of the regular business of the employer; and
6. Payment is made in regular intervals, not by the job

Front 18

When is the servant acting within the scope of employment?

Back 18

When the servant was doing what he was hired to do

Front 19

If the servant deviates from his normal tasks will the put him out of the scope of his employment?

Back 19

It depends

A minor deviation (DETOUR) is usually within the scope

A major deviation (FROLIC) is usually outside the scope

Front 20

When are the servant's intentional torts considered within the scope of employment?

Back 20

Servant's intentional torts are considered outside the scope unless:

1. Force is used to further master's business (e.g. bouncer);

2. Master ratifies the use of force ("nice job"); or

3. Master authorized the intentional tort

Front 21

Negligent hiring of the agent

Back 21

A master may be directly liable for his own negligence if he fails:

1. to train or supervise the employee; or
2. fails to check an employee's criminal record or job history

Front 22

If the third party releases the servant from liability, is the master also released?

Back 22

The master will be relieved from liability only if the release specifically mentions the master

Front 23

When must a third party elect to sue either the principal or the agent?

Back 23

If either the principal or agent objects, the third party must choose prior to judgment whether he wants to hold the principal or the agent liable

Front 24

When is a principal liable for an agent's unauthorized acts?

Back 24

Liable to third party when he ratifies the agent's unauthorized actions